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FPL deal gives West Palm additional $1.4 million a year; did city sign too soon?

The city approved a 30-year agreement with Florida Power & Light Co. on Monday that requires the utility to pay property taxes, giving cash-strapped West Palm Beach an additional $1.4 million next year.

The commission voted 4-1, with Sylvia Moffett dissenting. Moffett said the city should have held out for a better deal.

Last year, FPL paid West Palm Beach $7.85 million in franchise fees, which are based on electricity use in the city. The city would have received an additional $1.4 million from FPL, but FPL was able to deduct its property taxes, under the current agreement signed in 1984.

According to the new agreement, which will run through 2041, FPL will have to pay both its franchise fees and property taxes. In return West Palm removed a clause that would have allowed the city to buy FPL’s system and generate its own power once the deal runs out — something in which the city had not shown interest.

“The biggest (change) is your ability to purchase the system,” said West Palm Beach Finance Director Randy Sherman. “There are hundreds around the country. Some are well-run and some are a disaster. If you really don’t have that desire, you’re not giving up anything.”

Commissioner Bill Moss said he would never want West Palm to take over the system.

“Look at the trouble Lake Worth is going through with their utilities, power system,” Moss said. “They’re trying to get FPL to take it back from them.”

Imogene Isaacs, the city’s internal auditor, sent a letter to commissioners expressing concern that the city rushed to complete a deal that didn’t need to be finalized until 2014.

FPL area manager Don Kiselewski denied that the deal was rushed, saying he first approached City Administrator Ed Mitchell in 2008 to renew early.

“We knew there would be financial difficulties ahead, and this could bring the city additional revenue,” Kiselewski said. “This has been anything but a rush, as far as I’ve seen it from our side.”

Moffett said that Sarasota reached a better deal with FPL. In that deal FPL agreed to numerous environmental clauses, including performing an energy audit of Sarasota’s 100 largest electricity-consuming accounts.

“If such an agreement will affect the city for 30 years, it should have been brought forward to more departments than just finance, law and administration,” Moffett said. “The public also should have been included.”